The recent stock market rally, which saw indices rising by over 40 per cent, is beginning to give some relief to the broking community.
Sample this: Amit Shah, a dealer with a leading stock broking firm, feared job loss because of dwindling business. He confessed that there were many days in the October-February period when there was little work to do. Clients were simply not interested in trading. The recent spurt in volumes has given him some solace. Since March, volumes have shot up by over 30 per cent.
And for some, there is good news as well. Mukti Desai, a sub-broker with Motilal Oswal, is happy about opening nine new corporate trading accounts in the last fortnight. “Business is picking up after the lull. Day traders are once again glued to the screen and client calls are on the rise,” she said.
Since mid-March, the Bombay Stock Exchange (BSE) Sensitive Index, or Sensex, has been rising consistently. At present, it is trading comfortably above the 10,500-level.
“With trading volumes going up by over 30 per cent in the last one month, confidence is up. Some longer term players such as high net worth individuals and funds are ready to invest as they feel things could be more stable,” said Deven Choksey, Managing Director, K R Choksey Shares and Securities.
As per rough estimates by market players, over 15,000 people working with wealth or portfolio management, dealing room, operation and client servicing departments of financial services firms had lost jobs in the past six months.
“However, with some sanity returning, things are looking better. If this rally continues, there could be even some expansion,” said a market player.
Importantly, the value of collateralised stocks, which were either pledged by company promoters or clients, has declined significantly, resulting in huge mark-to-market losses for brokers. The recent rally has given brokers a chance to reduce their losses incurred on this account and restructure their loan books.
Although many believe this rally could fizzle out following the election results, they are taking solace from the fact that it’s not just the Indian market but even world markets have rallied a good 30 per cent.
